Not sure if misled by broker

Dphotod

Hi all. New to forum!

Just been chatting with a friend who has similar situ with his mortgage, and am not sure if I have been misled / ill advised by a broker - and if there’s anything I can do about it.

I am the Director of my own Ltd Company, and currently am on a 5 year fixed term, 35 year mortgage at 2.02% (loan taken on last year in July)
I was told by my broker that very few lenders would give a loan off of accounts for Ltd, and that pretty much Virgin and Clydesdale were the two to go for.... (This property is my first purchase - not very experienced)

I was also told Dividends didn’t count for affordability - when after some research - yes they do!

A friend with a very similar LTV (we are both about 65%) was advised the opposite by his broker - that many do this with no issue, and has a mortgage with Leeds BS at 1.37%.

Just wondering based on the advice I was given - if there is anyone to talk to about rectifying this, or if possible to get a new mortgage deal - as obviously I took my mortgage with a higher % as I assumed I was stuck only with 2 choices based on advice from a broker.

Thanks for help in advance. :j and sorry if it sounds like just want to have a lower rate - but genuinely think I was ill advised?

haras_nosirrah

Some lenders use salary and dividends. Some use salary and net profit. None will use both. Virgin is a salary and net profit lender. Did you take all the money out of the company as dividends or did you leave some money behind to grow the business or for tax purposes as that may explain why you went that route

Dphotod

To be honest pretty much 50/50

Have a chunk in the biz, and take a fair amount of divs up toward the edge of the first tax bracket. at that time I was probably paying myself about 38k inc divs and base salary. The net profit would be more.

Just seems to grate that my brokers advice was so different, and for two people in the same situ financially and biz size, we have come out with quite different rates for extremely similar mortgages, and also making me feel I was extremely limited in provider choice.

haras_nosirrah

How much is your mortgage
It is possible that 38k income wasn't enough for what you needed to borrow so they wen't down the salary and net profit route

Had one this week
Salary and divs was 48k
salary and net profit was 72k
To borrow what they wanted we needed to go down the salary and net profit route.

Thrugelmir

Did your friend pay a product fee to obtain that mortgage rate?

Dphotod

Mortgage is 255k - so correct, salary wouldnt have covered.

My situ is similar to the one you've described, with the net profit about on biz 80k. (Was averaged from two years to something like £79.450.00)



Friend also is 12k plus divs and we operate at a very similar level.



His mortgage is 40 years, and 3.75x income, 60% ltv.

Mine is more like 3.3x based on company profits (am I wrong to calculate it on this?), with 68% LTV, 35 years.



Just seems like he has a much better interest rate for seemingly similar situations.

Do interest rates get hiked / dropped depending on differences such as the 8% LTV difference etc? Or could it be that his property value may be cheaper etc.

Punching my current deets in to some comparisons are coming back with cheaper deals than I am on with a range of providers.



RE product fee - I wouldn't know I'm afraid.
And again - still not sure why broker said i could only go with very limited companies.

haras_nosirrah

Leeds is a salary and dividend lender. With them you could have borrowed roughly 170-175k

If you needed more than the broker was correct to go down a lender who used salary and net profit.

Your friend must have been able to borrow what he needed using salary and dividend income (which the vast vast majority of lenders use)

haras_nosirrah

60% and under will also be in a lower bracket (you would be in the 70% bracket)

Dphotod

ah okay - so I assume this would just mean I can't get as good-a deal?

Nebulous2

Was there a time gap between the two of you applying? Deals change all the time, but the trend has been downwards recently.

haras_nosirrah

It means there are less lenders offering so it would have been the best of the ones you could have obtained.